Trump's Social Security tax proposal risks long-term cuts

A new proposal from President Trump could change the way Social Security benefits are taxed. He wants to eliminate taxes on these benefits, which many seniors find complicated and burdensome. However, this change could create problems for retirees down the line. Social Security is a crucial program for older Americans. About half of seniors rely on it for at least half of their income. Trump's campaign promised to help them get more from Social Security. But it's essential to understand the current issues facing the program. The Social Security trust fund, established in 1939, is losing money. It helps pay benefits to retirees, but has declined by $260 billion since 2018. The fund could be completely depleted by 2033, which would mean a 21% cut in benefits for seniors. Eliminating taxes on Social Security could seem appealing, but many seniors currently pay very little in taxes. Households with low incomes don't face significant tax burdens on their benefits. For most, the taxes amount to less than 1%. However, Trump's proposal could lead to less revenue for the trust fund. This is important because the fund's payments depend on taxes collected. A study estimates that eliminating taxes will reduce revenue by $1.45 trillion over ten years. This could speed up the depletion of the fund and lead to deeper cuts in benefits. Ultimately, while eliminating taxes might help some seniors in the short term, it could create more significant financial problems in the future. The government needs to make broader changes to ensure Social Security remains sustainable.